AXP: American Express Makes a Bullish Break

by Sam Collins | March 3, 2014 3:15 am

American Express(AXP[1]) — On Oct. 17, this investment-grade, leading global payments and travel/expense service company broke from a five-month consolidation on heavy volume. The next day in my Trade of the Day column, I recommended AXP stock[2] at $80 with a 12-month target of $96 and a trading target of $86.

In late November, AXP announced an agreement with U.S. Bancorp (USB[3]) to accept U.S. Bank credit cards on the AmEx card network. Analysts are of the opinion that this new arrangement will enhance the credit-card experience of AmEx cardholders since U.S. Bank is renowned for its rewards and discounts. Wells Fargo (WFC[4]) partnered with AmEx to offer credit cards on its network in August.

Analysts’ consensus estimate of earnings is for $5.45 this year and $6.05 in 2015. Standard & Poor’s has a five-star (strong buy) rating on AXP stock[5] with a 12-month price objective of $109.

On Jan. 22 at $91, I reiterated our buy recommendation with a trading target of $100. On Friday, AXP stock broke from a bullish “V” formation, and so the near-term target of $100 is confirmed.

Longer-term investors may hold this investment-grade stock for S&P’s target of $109.